Clarification Between the SR 710 Study and the Public-Private Partnership Program

Background

A Status Report on the Public-Private Partnership Program was presented to the Metro Planning & Programming Committee today as a “receive and file” report. In response to public comment received, the purpose of this information bulletin is to clarify the distinction between the SR 710 Study and the Public-Private Partnership Program.

SR 710 Environmental Study

In May 2010 the Metro Board directed staff to proceed with an environmental review process for a set of multi-modal options for the State Route 710 (SR 710) study. The SR 710 study is undertaken by the Los Angeles County Metropolitan Transportation Authority (Metro) in conjunction with the California Department of Transportation (Caltrans) as the lead agency. The main objective of the SR 710 Study is to find solutions to relieve ongoing traffic congestion, improve mobility on local arterials and the regional freeway system, and improve the quality of life in the western San Gabriel Valley and East/Northeast Los Angeles communities. The study is currently in the alternative analysis phase, during which a number of multimodal transportation improvements are being studied pursuant to the California Environmental Quality Act (CEQA) and the National Environment Policy Act (NEPA) process. The multimodal improvements may include a surface and subsurface highway/freeway construction, heavy and light rail systems, bus rapid transit, local street upgrades, traffic demand management and traffic system management improvements and/or any combination. These studies will support preparation of an Environmental Impact Report (EIR) and an Environmental Impact Statement (EIS). The EIR/EIS will lead to a decision by Caltrans with regard to the selection of a locally preferred alternative by the winter of 2014.

Public-Private-Partnership Program

Metro’s Public-Private Partnership (P3) Program was established by the Metro Board of Directors to identify alternative funding sources, and to accelerate delivery of Measure R projects. Four highway projects were selected for evaluation to determine if some of them might be suitable for private sector participation in the design, construction, financing, operation and/or maintenance of facilities.

The SR 710 Gap Closure project was identified as a high-potential candidate for delivery as a P3 project, assuming a tolled highway facility in a tunnel alignment is selected as the locally preferred alternative. This assumption should not be construed as predicting or predetermining the outcome of the SR 710 study currently underway, or in limiting a full and complete range of analyses of multi-modal alternatives, as required by law (CEQA/NEPA). Rather, the project assumptions were for the purpose of providing a baseline to assess the validity of alternative concepts for a P3 project delivery.

Further, the P3 analysis indicates that implementing a long term toll concession – wherein Metro contracts with a private partner to design, build, finance, operate, and maintain a tolled tunnel project – will minimize the need for Measure R funds by providing additional financing alternatives. This strategy allows for the advancement of funds for construction through private debt and equity investment, accelerates project delivery and provides a revenue source for repayment to the private partner. Understanding that the $780 million in Measure R funds allocated for the SR 710 Gap Closure will not be adequate to complete the project; a P3 funding scenario may prove to be a promising funding and delivery option.

If approved by the Metro Board of Directors, Caltrans, and State and Federal agencies, the P3 effort would provide Metro a basis for moving forward with a delivery approach if the selected SR 710 alternative includes a tolled tunnel. The financial advantages of a P3 scenario are that it:

Maximizes the extent to which the project is self-sustaining by minimizing the need for Measure R funds;